USEA Reports: Europe's Gas Crunch: The Pending Crisis Around Nord Stream 2 and Ukraine Transit [1]

[2]

By Ryan LaCoe

USEA 2019 Summer Intern

 

Despite Berlin and Moscow’s rush and resilience to complete the Nord Stream 2 pipeline throughout the Baltic Sea, several variables have left many European countries deem this project doom upon the Europe’s oil in the future. Several members of the European Union have expressed concerns regarding this project, however Germany and Russia have no signs of stopping. Thomas O’Donnell expressed his concern throughout the presentation as to what he believes will occur if Russia and Germany decide to try and go through with this project. He was rather bleak when discussing this issue saying, “if Russia and Germany choose to go through with this issue, it will likely be a cold winter in Europe.”

O’Donnell mentioned some rezoning as to why he believes Germany supports the Nord Stream 2 pipeline. His first explanation regarding their resilience toward this deal is their desire for peace with Russia. Creating this new means of business with Russia would diminish the likelihood of warfare between the two countries. The second reasoning O’Donnell believes Germany is so interested in connecting with Russia for exportation of gas is due to their lack of trust in the Ukrainians. The Ukraine is not in the greatest political state at the moment, and it is believed their political turmoil has played a major role in the Nord Stream 2 pipeline agreements. Germany has discussed the issue with the United States on multiple occasions. The United States have proposed to export gas to Germany, however, a lack of resources hinder our ability to deliver the amount demanded by most of Europe.

Several countries within the European Union have taken a steady stance regarding NS2. The EU along with German policy makers have agreed they have become too reliable on the Russians for gas, and want to diversify their gas consumption through more reliable countries. Russia currently accounts for about 60% of Germany’s gas imports, leaving Germany and much of Western Europe extremely susceptible to serious shortages if Russia decided to cut their gas supply. Germany and Europe’s lack of diversification in gas imports also leaves them vulnerable to different pressures from the Russians, and finalizing this project would leave them wide open in times of political pre. The European Union is also placing pressure on Germany, explaining that this does not help recent goals of becoming less dependent of Russia for gas and looking for countries within the region to consume gas from. Eastern European countries were completely looked passed by Germany during this whole process, and countries like Ukraine could have severe impacts on their economy if this new pipeline begins production.

Despite several efforts to counter this new deal of the NS2 pipeline, it seems as if Germany and Russia will plan to go through with the construction. O’Donnell firmly believed that if the two countries planned on attempting to start the build, it would get immediately shut down, leaving Germany and Western Europe out of gas. This would have serious implication on several economies along with the lives of individuals who reside in those areas.